It’s been a tough year for fast-fashion retailers — and for none more than Forever 21.
The Los Angeles-based chain has topped headlines amid speculation of an imminent bankruptcy filing and purported closures of roughly 700 stores. In a statement addressing the rumored Chapter 11, the company wrote, “Our stores are open, and it is our intention to continue to operate the vast majority of U.S. stores, as well as a smaller amount of international stores.”
According to market intelligence platform Near, visits to Forever 21 had already been dwindling in the months leading up to the news of its rumored bankruptcy — after which it saw a 10% spike in foot traffic. “From June to September, we can see a continued decline in footfall overall, correlating with speculation that the fast-fashion retailer joins other brands having trouble luring lucrative young shoppers,” Near’s VP of marketing, Smriti Kataria, told FN.
As Forever 21 faces shrinking sales and declining foot traffic, many retailers are likely looking to lure in the company’s target market of millennial and Generation Z shoppers. However, Near’s recently released “Profile of a Millennial” study — which analyzed the purchasing behavior and brand preferences of more than 1.6 billion users — discovered that many of the chain’s young shoppers aren’t heading to rival fast-fashion retailers. Instead, they’re opting for sportswear stalwarts Adidas and Nike, as well as chains like Modell’s Sporting Goods.
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Near’s report showed that Adidas and Nike were among the demographics’ preferred brands, with the former tracking more Gen Z visitors at stores versus the Swoosh. Breaking down the data into locations, it reported that Adidas and Nike were neck and neck in Los Angeles for the Gen Z and millennial cohorts, but Modell’s saw more traffic in New York, followed by Nike for millennials and Adidas for Gen Zers. The Three Stripes also emerged as the top sporting goods brand in Austin, Texas, driven by female Gen Z shoppers.
That’s not to say other fast-fashion retailers aren’t also benefiting from Forever 21’s efflux of shoppers. Unburdened by costly real estate, online rivals like Missguided and Boohoo are thriving — capitalizing on ultra-trendy pieces at low prices, combined with the ability to get product from design to market in about two weeks (compared with the four- to six-week standard among its peers).
While Forever 21 has yet to file for Chapter 11 protection, the retailer’s debt challenges have been well documented, and several of its fashion peers, including Payless ShoeSource and Charlotte Russe, have already gone bankrupt this year. According to Coresight Research, U.S. retailers have announced plans to shutter 8,558 stores so far this year — already exceeding 2018’s total of 5,844 closures.
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